Why isn't Apple Pay taking off?
Google, Apple, Facebook (GAF)* are all trying to crack mobile selling.
Yet none of them have. And the signs are that they won’t crack it in Britain soon.
Why is this?
Well it’s not an impossible nut to crack.
China has done it. Recently there have been reports of cash disappearing in Chinese cities as people use their phones to pay for everything. Restaurants, taxis, coffee shops and even buskers take mobile money.
And Kenya’s been developing mobile money for years, well ahead of European markets.
But western markets, especially Britain, are going in a different direction.
Relatively few people use GAF to pay for anything except the odd app on Android Play or the Apple Appstore.
It’s not like GAF aren’t trying. Every few months there’s a new attempt to get us to save our card payment details on our phones. Then we could easily pay by waving our phone.
For instance Apple has recently made payment via Watch easier. Apple Pay integrations reportedly increase checkout conversion rates by 200%. And this sort of dramatic increase in conversions from Apple Pay has been reported in many comparable situations where people save their card details.
But there’s been plenty of evidence in recent months that most people aren’t converting to Apple Pay and its competitors.
Ofcom's 2017 Communications Market Report shows that only 5% of people have tried mobile payment, up 1% on the year.
I was intrigued by this. So I asked Transport for London (TfL) - which deals with millions of transactions annually covering £1.7bn. You’d expect that London as the leading city in the UK, itself one of the leading ecommerce markets globally, would be a major user of Apple Pay.
Tfl’s figures show something different.
They show that only 1.5% of payments on the London underground system are by Apple & Android Pay. That compares to 17.7% by contactless cards. That’s 12 times more payments through cards than contactless. The balance in case you are wondering is people using London’s Oyster payment card - of whom 80% are topping up by bank card.
In other words, people have the choice to use Android and Apple Pay, but they just don’t use it.
Figures from UK Finance, a trade body, show contactless payment using cards rocketing. 34% of card payments are now contactless, and use is increasing fast, up 130% in the last year. Britons turn out to find contactless payment even better than mobile payments.
It seems to be the value of being first mover for contactless cards.
As Scott Thompson, insights director at Publicis Media, says: “If you use a card (Oyster or credit/debit) and it doesn't work, it looks like there is a problem with the card or the reader. Everyone has experienced it, so you get some degree of sympathy. But if you use a phone (or worse, a watch) and it doesn't work, you just look like an idiot playing with technology that doesn't work and getting in everyone's way.”
I’m also told by industry experts that the RFID technology in contactless cards tends to work slightly faster and more reliably than the type of NFC used in phones.
So the key thing is practical. Contactless payment comes automatically with 111m cards being used in Britain. And there are 506,000 terminals that take payment. That means almost everyone can take one out of their wallet and pay.
You’ll virtually never wave your card at the bar of a pub for them to look at you confused. While if you wave your phone or your watch, they might look confused.
So while the barriers to people using Apple & Android Pay aren’t high, they are just high enough to slow their adoption. Probably not forever. But a good reminder that just because you might think that a technology should take off, it’s not the same as it going mainstream.
*Amazon is missing from this list because they do have large numbers of logged in users for their app. And, currently, they aren’t trying to be a facilitator of buying anything on any device - you still need to go through their website or app for everything.